- March 04, 2011
- All Massachusetts Issuing Offices
- New Homestead Law - Effective March 16, 2011 Massachusetts General Laws, Ch. 188, 1-10
An entirely new Homestead Law takes effect in Massachusetts on March 16, 2011. The new law provides automatic protection for an individual's principal residence against subsequent attachment, levy on execution or sale to satisfy debts to the extent of $125,000; or $500,000 upon filing a Declaration of Homestead. This bulletin addresses the impact of the new law upon conveyances and mortgage transactions.
Automatic and Declared Homesteads. The purchase of a home by a person who intends to occupy the property as his or her principal residence will automatically give rise to a homestead in the amount of $125,000 for that individual and the other members of his or her family. [G.L.c. 188, §4]. Additional protection to the extent of $500,000 is afforded an owner who files a written declaration of homestead on a home occupied or intended to be occupied as a principal residence. The declared homestead can be of the "regular" variety that benefits the individual and the members of his or her family [G.L.c. 188, §3], or the "elderly/disabled person" type benefiting only that individual [G.L.c. 188, §2]. The specific requirements of the declaration are set forth at G.L.c. 188, §5 which now requires signatures of both a husband and a wife and must disclose the identity of a non-titled spouse [§5(1)]. Sample Declaration of Homestead forms are attached at the end of this Bulletin.
Termination of Homesteads Generally. Homestead rights are released under a deed of conveyance signed by the owner and the owner's non-titled spouse or former spouse, if any, who resides in the home as a principal residence, or if the property is held in trust, by a deed from the trustee. Homestead rights may also be terminated by a separate release signed by the aforementioned individuals; by a new declaration of homestead; or by "abandonment". [G.L.c. 188, §10].
Termination of Elderly/Disabled Persons Homestead. To release an "elderly/disabled person" homestead the deed of conveyance or release need only be signed by the declarant. A non-titled spouse does not need to sign, but the identity of the non-titled spouse is still included in the declaration because both a titled or non-titled spouse can succeed to the benefits of an elderly/disabled person homestead under certain circumstances. In addition to a conveyance or a release by the declarant, the acquisition of a new homestead or the abandonment of the home will result in a termination of the elderly/disabled person's homestead. [G.L.c. 188, §2(b)].
Self-Subordination of Homestead to Lien of Mortgage. The signature of a non-titled spouse is no longer required on a refinance mortgage to release or subordinate the non-owner spouse's homestead rights. Only the owner(s) need to sign the mortgage. There is no requirement that the mortgage contain language setting forth that the homestead is being subordinated, and the statute prohibits lenders from requiring the recording of a release of homestead in connection with the making and recording of a new mortgage. [G.L.c. 188, §9].
A Safe Harbor: Marital Status Recited in Deeds and Affidavits. Even though a homestead declaration may identify a non-titled spouse, the occurrence of a divorce, death or remarriage can make the information in the declaration "stale." To address this, statute at §13 provides:
A deed, release or mortgage containing a statement of the marital status of a grantor may be relied upon by a good faith purchaser for value. As to acts undertaken in good faith reliance on such deed, release or mortgage, an affidavit executed and acknowledged by the grantor, releaser or mortgagor under penalty of perjury stating that, at the time of the delivery of the deed, release or mortgage, the affiant had no spouse then entitled to claim the benefit of an existing estate of homestead, shall be conclusive proof of the nonexistence of such benefit at that time.
Both a deed, release or mortgage containing the recital of marital status is required in addition to the affidavit and the affidavit may be recorded together with the aforementioned instruments.
New Notice Requirement. The statute requires at §14 that closing attorneys in mortgage transactions must provide the mortgagor with a written "notice" that shall include a summary of the differences between the automatic homestead protection and the enhanced benefits acquired by making a declaration of homestead. The mortgagor must sign and acknowledge receipt of the notice. A proposed Notice form is also attached below.
The new Homestead Law was approved on December 16, 2010, with an effective date of March 16, 2011. Drafting documents or applying the provisions of the statute before it becomes effective can lead to unwanted results. To see a reprint of the new law, click here. For a detailed review and analysis of the new law, click here.
If you have any questions relating to this or other bulletins, please contact your local underwriting personnel or Stewart Legal Services.
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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- Underwriting Manual:
- MA 8.08 Massachusetts Homestead
- Exceptions Manual:
- MA Declaration of Homestead - Pursuant to MGL Chapter 188 2 - Elderly or Disabled
- MA Declaration of Homestead - Pursuant to MGL Chapter 188 3 - Married Couple (Non- Elderly or Disabled)
- MA Declaration of Homestead - Pursuant to MGL Chapter 188 3 - Individual with Identification of Any Non-Titled Spouse (Non- Elderly or Disabled)
- MA Declaration of Homestead - Pursuant to MGL Chapter 188 3 - Trust - (Non- Elderly or Disabled)
- MA NOTICE OF RIGHT TO DECLARE HOMESTEAD PROTECTION (G.L.c. 188, 14)